Axe on Tax havens under new Mauritius treaty India will tax capital Gains

India has got the power to tax the capital gains on the sale of shares of domestic companies by entities based in Mauritius. This move will have a major impact on funds invested via Mauritius.Mauritius is used as a tax havens as so many investor route their investments via Mauritius to get tax benefits. It is said to be very sensible act by the government.

This move will not only fetch some income to the India’s kitty but also will curb the black money.Anticipating a sharp decline from market to amendments in treaty , the government has taken care to ensure the changes don’t have a drastic effect through a staggered rollout that does not impact the existing investors.More clarity over the transition is awaited by the market.

Two countries amended 33 year old tax treaty will curb the tax avoidance by investors using Mauritius as a shield to their original identity.Most of the experts have mark it as good move by the government.

Indian market reacted a little negative to this news. Leading index Nifty open a little downward but it covered fast from its lows and seem to completely ignore the negative impact of news.